The Walt Disney Company was founded by brothers Walt and Roy Disney on October 16, 1923, as a small animation studio which grew into an empire. The Walt Disney Company has four major business divisions: Studio Entertainment, Parks and Resorts, Consumer Products, and Media Networks. According to OpenSecrets.org, "The company that gave the world Mickey Mouse has evolved from cartoons and theme parks to become the second largest media conglomerate on the planet. The company produces movies through Walt Disney Studios, Touchstone, Hollywood Pictures, and Miramax; owns television interests including ABC, the Disney Channel and ESPN; runs dozens of local television and radio stations; and even lays claim to two major sports franchises, hockey’s Mighty Ducks and baseball’s Angels, both of which play in Anaheim, Calif. Predictably, Disney is concerned with a broad range of issues, including strong copyright protection of its television and movie works on the Internet and excessive government regulation over the amount of violence on television. It was one of several media companies to support normalized trade relations with China."[9]

Company History

The Walt Disney Company began as Walt Disney Studio in 1923, a joint animation venture founded by Walt and his brother Roy Disney in California. The first series included Steamboat Willy featuring the iconic character Mickey Mouse and the following series, Silly Symphonies. By the 1930s, Walt Disney Studio had begun producing merchandise featuring its animated characters, and in 1937 its first feature film, Snow White, became the highest grossing film of all time until the release of Gone with the Wind.

With World War II came the initiation of Disney’s role in producing propaganda at the request of the State Department as well as military training films. Two examples of Disney war-time propaganda can be seen here: Top 10 Propaganda Videos

After WWII, Disney continued producing films and television shows, both animated and live action. Disneyland park was established in 1957 in California, and Disney World followed it in Florida in 1971. Over the next few decades, Disney established various production companies including Touchstone and the Disney Channel and further theme parks.

In 1996, Disney significantly expanded both its operations and influence by purchasing ABC Studios and its affiliated radio and television stations and newspapers.[10]

Historical Financial Information

Business Strategy

According to its corporate website, “Since its founding in 1923, The Walt Disney Company and its affiliated companies have remained faithful to their commitment to produce unparalleled entertainment experiences based on the rich legacy of quality creative content and exceptional storytelling. Today, Disney1 is divided into four major business segments: Studio Entertainment, Parks and Resorts, Consumer Products, and Media Networks. Each segment consists of integrated, well-connected businesses that operate in concert to maximize exposure and growth worldwide.”[11]

Political and Public Influence

While Walt Disney Company has contributed plenty to political campaigns and lobbying efforts, perhaps the most significant aspect of its public influence is its sheer reach, particularly in the media. Disney owns many dozens of newspapers, magazines, television and radio stations, and internet sites, including but not limited to all ABC and ESPN related entities.[12] Disney(ABC) and other major media corporations lobby against reduced or free air-time for political campaigns.[13][14]

However, Disney's direct financial connections to politics are hardly insignificant. Through it's many affiliates, including the ABC franchises, ESPN, Miramax Films, Touchstone Pictures and TV, Walt Disney World, Walt Disney Parks & Resorts, Walt Disney Pictures, Lyric Street Records, Hollywood Records, and a number of others, Disney has a significant presence in the U.S. political process through its lobbying activities and campaign contributions. Disney is characterized as a "Heavy Hitter" and "Major Contributor" by the political influence through lobbying and campaign contributions tracking site, OpenSecrets.org. It has consistently spent hundreds of thousands of dollars in lobbying, campaign contributions, and contributions to Political Action Committees. In the 2008 campaign cycle, Disney contributed over a million dollars to congressional candidates, 73% of them democrats, up from 58% democratic in 2007. At least since 1990, Disney has contributed between 500,000 and over $1 million to political campaigns, with democrats tending to get more than republicans, though how much so varies from year to year.[15] The list of congressional committees receiving Disney funds in 2008 is shockingly extensive, including everything from energy and education to international relations, transportation, "indian affairs", commerce, and even armed services and intelligence.[16]

Political Contributions

In the 2008 election cycle, Disney spent over a million dollars in contributions to the campaigns of 99 U.S representatives and 39 senators, splitting the money about evenly between democrats and republicans.[17]Barack Obama's campaign received more than any other from Disney in 2008, nearly a quarter of a million dollars, but Hillary Clinton, John McCain, Christopher Dodd, and Rudolph Giuliani all also received tens of thousands.[18]Walt Disney Company gave $367,500 to federal candidates in the 05/06 election cycle through its political action committee (PAC) - 48% to Democrats, 50% to Republicans, and 2% to other parties. [19] The company's gifts to Al Gore and his wife during his presidential campaign violated the Ethics in Government Act and he was seen regularly with then-Disney chairman Michael Eisner while the company was attempting to garner support for a new theme park.[20]

Lobbying

Disney spent $4.32 million in the first 3 quarters of 2008 on lobbying expenses, 1.7 times what it spent a decade earlier ($2.5 million in 1998).[21][22] However, only $90,000 of the total amount was spent on issues related to the entertainment industry as TV, movies, and so on - the vast majority landed in the pockets of lobbyists promoting Disney's interests as a "Business Service," an industry whose major players include marketing and advertising firms, as well as public relations companies, management consulting firms, and market researchers.[23][24] Disney's contribution in the first three quarters of 2008 to lobbying expenditures constituted over one-tenth of the entire Business Services industry's lobbying expenditures for that period through its affiliate, Disney Worldwide Services.[25] The agenda items Disney's money went towards influencing included copyright, patent, and trademark, telecommuications, trade, travel and tourism, consumer product safety, media information and publishing, and taxes.[26] The lobbying firms Disney hired in 2008 were American Continental Group, Cassidy & Associates, and Disney Worldwide Services for by far the greatest amount, at $2.52 million.[27]

The company spent $4,123,524 for lobbying in 2006. Most of this was spent using in-house lobbyists but three outside lobbying firms were also used.[28] Disney contributes significantly to the massive lobbying expenditures made by the U.S.'s largest media conglomerates which promote non-regulation of media consolidation.[29]

Corporate Accountability

There are generally two major corporate accountability issues associated with the Walt Disney Company. The first is related to the manufacture of their toys and related products, and the second has to do with the company’s ownership of ABC Studios and a multitude of other media companies and outlets. The conditions under which Disney's many consumer goods are produced as well as the products' safety are the focus of contemporary campaigns related to the Walt Disney Company. It has also been associated with the growing consolidation of the media into huge conglomerates who own dozens or even hundreds of news and entertainment producers and outlets, particularly after its acquisition of the ABC brand.

Labor

Disney contracts with over 40,000 factories and 6,000 vendors around the world. It has established an International Labor Standards code and oversight group, and it utilizes independent auditors in its overseas factories.[30] Despite the ILS program and its associated collaborative monitoring project in China which includes NGOs in addition to the internal and independent monitors employed[31], Disney continues to come under public scrutiny for questionable labor practices. Motivated by the opening of Hong Kong Disneyland in 2005, the Hong Kong-based NGO Students and Scholars Against Corporate Misbehavior (SACOM)launched a series of campaigns to hold Disney accountable for labor practices in the factories which make its products. SACOM's "Looking for Mickey Mouse's Conscience" campaign emphasizes that Disney's contractors ought to comply with Chinese labor laws, and the organization cites poor working conditions (including long hours, high injury rates, illegally low pay, nonpayment of wages, and forcing workers to sign blank contracts) and aims to make the results of the audits of Disney contracted factories publicly available as well as provide workers with copies of their contracts and Disney's Code of Conduct printed in Chinese.[32] SACOM was joined in 2007 by the Clean Clothes Campaign when supporting striking workers at Haowei Toys factory in Shenzhen.[33] By fall of 2007, 9 Disney factories in China had been investigated by SACOM and found to violate labor laws and human rights.[34] SACOM's efforts to publicize Disney's low wages (less than 50 cents an hour) resulted in the company's presentation with a "social irresponsibility" award by Swiss NGOs.[35]

A 2006 investigation into working conditions in several South China factories supplying Disney with consumer goods found workers were not given contracts as required by Chinese labor law, were paid illegally low wages, were not paid for overtime, worked excessive hours (often 16 hours a day) and were forced to work overtime, wage payments were delayed and arbitrarily deducted from, the working conditions were unsafe, and workers' living quarters and food were poor. The report, published by SACOM, concluded that Disney's Code of Conduct and Monitoring Systems "exist in name only", and that Disney's primary means of dealing with labor issues is to "cut and run" rather than comply with labor laws and give workers fair wages and safe working conditions.[36]

Human Rights

Due to its massive size (30,000 acres) and importance as revenue-producer, Walt Disney World has been given government-like leeway over its territory in Florida. It has used this power to evade civil suits related to patron injuries and intimidate the representatives of plaintiffs, as well as behave as a law-enforcement entity in its own right, violating the civil rights of patrons, including those accused of shoplifting.[37]

Despite 9 years of concentrated boycotts from the Christian right in the U.S., Disney refused to drop its "homosexual friendly" policies, including allowing gay rights groups to openly utilize Disney parks for events and offering benefits to same-sex couples.[38][39]

Environment

Disney has trademarked the term "Environmentality", referring both to their company's stated commitment to environmentally friendly practices, its Environmental Policy Division, and its newly created brand by the same name. The slogan of "Environmentality" is "Attitude and Commitment to Think and Act with the Environment in Mind"[40], and the stated company philosophy merges corporate growth and environmentally friendly practices. Projects under this campaign include turning all the kitchen grease from the 2008 Winter X Games into biodiesel fuel[41], as well as a larger-scale "reduce and reuse" type program that the company highlights is both more "eco-friendly" and saves money.[42] Because of the large number and obscurity of Disney's suppliers, it is difficult to determine the environmental impact of the production of its consumer goods.

Despite these claims, the reality has a way of surfacing: Vanuatu: Reefs ta Risk After Disney Film. Though Disney cannot of course be blamed with as an intentional provocateur of such fishing practices, the consequence of its popular children's films involving real animals appears to have the potential for unintended and environmentally damaging consequences.

Consumer Protection and Product Safety

Like many other brands which sell children's and household products and especially toys, Disney began to independently test its products in 2007 due to concerns about safety. After Mattel recalled three separate toys because of their lead content, Disney decided to begin independently testing the toys whose manufacturing is outsourced to other companies but which bear the likenesses of characters central to the Disney brand. The move to independent testing of the safety of products bearing the Disney brand represented a shift in company policy from the norm in similar arrangements - as toymakers, those manufacturers to whom production is outsourced, are usually held liable for unsafe products, product safety had not previously been seen as the brand-holding company's concern and recalls were regarded as sufficient means to periodically ensure product safety. However, deciding that continuing scares regarding the safety of consumer products might damage consumer trust in the toy brand itself, Disney, Mattel, Toys R Us, and other retailers and toy companies developed independent testing strategies to take a more active role in the maintenance of product safety and trust in both the brands and the toy industry itself. Disney specifically considered making surprise inspections at its Chinese suppliers, though as of 2007 it was not contractually permitted to do so, and such inspections were considered "difficult to time." Disney planned to pass the costs of its off-the-shelf inspections and other safety checks on to manufacturers in contracting.[43]

Despite such pronouncements, questionable products continue to be sold under the Disney brand, including a "Winnie the Pooh" bassinet whose design has been allegedly linked to the death of two infants in 2008. The resulting lawsuit again raised the issue of liability when companies outsource production of their consumer goods, though it concluded that Simplicity, Inc., to whom Disney had licensed the product, was responsible for the deaths.[44]

Anti-Trust and Tax Practices

In 2003, Disney and 4 other media conglomerates successfully lobbied to have FCC regulations related to the size of media enterprises and the conglomeration of the industry loosened. [45]

Social Responsibility Initiatives

In an effort to distance itself from childhood obesity, Disney discontinued its partnership with McDonalds, in which is provided the toys for McDonald's Happy Meals, in 2006.[46] It has also participated in corporate social responsibility initiatives in China.[47]

Business Scope

Disney's Media Networks division "encompasses a vast array of properties on the television, cable, radio and Internet landscape. The ABC Television Network includes ABC Entertainment, ABC Daytime, ABC News, ABC Sports, ABC Kids and the Disney-owned production company Touchstone Television. ABC Owned Television Stations operates 10 stations in top markets across the country, ABC Radio owns 72 stations nationwide, and the company's expansive radio offerings include Radio Disney, ESPN Radio and ABC News Radio." [2]

"Kim Possible Media Networks incorporates a suite of cable networks, including ESPN, Disney Channel, ABC Family, Toon Disney, and SOAPnet. The segment also operates Walt Disney Television Animation and Fox Kids International, and holds the company's equity interest in Lifetime Entertainment Services, A&E Television Networks and E! Networks," it states on its website.

Media Networks also includes Buena Vista Television, "which produces and distributes syndicated programming; Buena Vista Television International, which distributes Disney's series and movies for television outside the United States." [3]

While finding a list of specific suppliers Disney uses, its company website describes the "partnerships" it seeks with "diverse" suppliers of various capabilities and reaches. While Disney has appointed a Director of Supplier Diversity and Sustainability to "integrate Environmental Awareness and International Labor Standards" in the company's "Strategic Sourcing Process," the current appointee, Delynne Ano, worked for Nestle for 17 years before joining Disney in 2004. Nestle is not necessarily known for its environmentally friendly and human rights respecting practices, but, more significantly perhaps, Ano's role in her last position was related to the development of different types of packaging for Nestle's frozen food brand, Stouffers, neither coordinating suppliers nor working to achieve environmental or labor goals for the company, while she is now held responsible for both at Disney. Disney's application process does mention in one line that suppliers are responsible for complying with international labor standards, but its licensing requirements are more heavily focused on company characteristics (5 years of experience in proposed product line, manufacturer not distributor) and its willingness to relinquish any and all rights to the products licensed under the Disney brand.[48]

Confirmed factories manufacturing Disney toys in Shenzhen and Zhuhai Cities, Pearl River Delta, South China, included (as of 2006):

An investigation into working conditions in these factories found workers were not given contracts as required by Chinese labor law, were paid illegally low wages, were not paid for overtime, worked excessive hours (often 16 hours a day) and were forced to work overtime, wage payments were delayed and arbitrarily deducted from, the working conditions were unsafe, and workers' living quarters and food were poor. The report, published by SACOM, concluded that Disney's Code of Conduct and Monitoring Systems "exist in name only", and that Disney's primary means of dealing with labor issues is to "cut and run" rather than comply with labor laws and give workers fair wages and safe working conditions.[49]

Some possible suppliers to Disney include:

charmshow

Shanghai Hug Trading Co., Ltd.

Textilestar Trading Co., Ltd.

Omeson International Trading

Shenzhen YC Technology Co., Ltd.

Goal-Park International Trading Co., Ltd.

Huicheng Trade (Hong Kong) Co. Ltd.

OMGB Pins

Shenzhen imiss watch Co., Ltd.

And many others, nearly all based in China, particularly concentrated in Shenzhen though not exclusively. The companies vary from manufacturers to distributors and traders, tend to have been recently established, and manufacture consumer goods for a variety of companies besides Disney.[50]

Rather than using credit to run its operations, Disney is large and successful enough to operate as a creditor to a variety of other enterprises, ranging from the intuitively related Euro Disney to the more surprising Lehman Brothers. However, the financially embattled Euro Disney has many creditors of its own, with Disney backing nearly 40%, and other sources, even Saudi Prince Alwaleed bin Talal, the French government, and 3 French banks (the state-owned Caisse des Depots et Consignations, Credit Agricole and BNP Paribas).[51] Euro Disney's difficulties are traced to the failure of Disneyland Paris to attract needed revenues and interest after its founding in 1992. The difficulties of Disneyland Paris are themselves attributed to French labor laws and a general tendency for theme parks and resorts to fail to appeal to European travelers. [52]

Disney's products and media companies are concentrated in the Americas and Europe, though its Euro-Disney affiliate has not been nearly as successful as the parent company. Its global reach extends into Asia, where the majority of its manufacturing is outsourced to the South China's Delta and surrounding regions, and its media companies, including ABC and affiliates and especially its films, music, and television productions, are internationally distributed, cable channels available in 125 countries or more, and its media is produced in an extensive number of languages including English, French, Spanish, Russian, and Hindu, .[54][55] According to its 2008 10-K filing, Disney's television stations reached 23% of the U.S. national audience the previous fiscal year, perhaps surprisingly well under the FCC-permitted maximum of 39%. However, Disney, through ABC Television Network and its affiliated local stations reaches fully 99% of all U.S. television households.[56] The ESPN company held by Disney and through its agreements with 45 internationally-held sports networks broadcasts in over 195 countries in 16 languages. Radio Disney (programming marketed for children and "tweens") is carried on 52 stations (41 of which are owned by Disney itself) and covers 60% of the U.S. market, not even including the audiences reached by its broadcast on internet and satellite sources of radio programming.[57]

Disney runs a number of theme parks in the U.S., as well as Disneyland Parks in Paris, Hong Kong, and Tokyo, as well as a cruise line, a vacation tour package company, vacation ownership and rental properties, and a large number of hotels and resorts of other types. [58] Studio entertainment, music production and distribution, advertising, consulting, real estate development, planning, research & development, publishing, and retailing (through the Disney Store) all expand Disney's scope even further beyond media broadcast and consumer goods, though these themselves have a nearly global reach between consumption and production.[59]